Powers Of Appointment

I. INTRODUCTION

When viewed within the pattern of rules that make up the estate tax chapter of the Internal Revenue Code, Sec. 2041 is unique. This is the one and only section that subjects to estate taxation property (i) that the decedent did not own at her death, and (ii) that the decedent never owned during her life.

The tax law with respect to powers of appointment changed significantly on October 21, 1942, and powers of appointment created before that date were "grandfathered" under the pre-existing law. This outline is limited to the tax treatment of "post-1942" powers of appointment.

II. VOCABULARY

There are some terms that you need to know in order to understand what Sec. 2041 is and how it works.